• mortgagee” or “trustee” include any person or entity exercising a power of sale pursuant to this Article

• This Article does not affect any right to foreclosure by action in court

• Mortgagee/trustee record a notice of foreclosure dates when conveyance was made by reason of the foreclosure.
• A notice of foreclosure shall consist of a separate instrument, or that part of the original deed of trust or mortgage rerecorded, reciting the information required hereinabove, the names of the original parties to the original instrument foreclosed, and the recording data for the instrument foreclosed
• Indexed by register of deeds

• This Section Is Designed To Protect Mortgagors From Mortgagees Who Purchase At Sales They Have Conducted or initiated pursuant to the power of sale in their mortgage contracts with the mortgagors. (Northwestern Bank v. Weston, 73 N.C. App. 162)

*Once 180 days they don’t loose priority, but have to wait for another party to bring the foreclosure action to collect.

(b) judgment not exceeding principal amt stated in claim

(c) Notice of action

• Take effect from the time of the first furnishing of labor or materials

• Upon filing claim under 44A-12

(b)     Time: 120 days after last day of furnishing labor

(c)     Contents of claim:

(b)     Name/add claimant

(c)     Descp. of property

(d)     Date/descrp. labor furnished

1. § provides for index and docketing.

2. contains all info required by §

If facially defective accepted clerk, must inform that will not be docketed.

• Owner- person with interest in real property
  • Someone who has an executory K purchase land.
• Real property-real estate lands, leasehold.

• Incident to and security for a debt for labor furnished.

• A claim of lien on real property the extent of the interest of the owner

• The document is drawn up correctly
• Cannot extend more than 15 yrs beyond the date of the security instrument
• Designated as a Future Advance
• Recorded
• There is a Notation of the maximum amount and the amount of the 1^st Advance
• All reqs met under this section get same priority as orig. DOT/mortgage under § 45-70.
  • Not computed in maximum amount secured
    • Fire insurance or taxes.

Purpose of notice: Makes sure mortgagor understands that there will be hearing to see if there will be a sale

Service of notice

Time period: At least 10 days prior to hearing

Posting time period: At least 20 days prior to hearing after exercising reasonable diligence

Any provided by Rules of Civil Procedure

Publication: Publish in newspaper recognized to run legal ads in that area (normal method of service)

Posting: Sheriff puts sign in conspicuous place and mortgagee has to file affidavit with court attesting to reasonable diligence (special method of service)

(a)(3) Service on record owner (might not be on the mortgage) or person obligated to pay, other lienholders or creditors, persons entitled to notice

(b)Mortgagor not be liable for any deficiency remaining after the sale, if interest property owner not given actual notice or notice of foreclosure sale.

(c )Contents of Notice:  Key people, information relating to hearing (what will happen in hearing), and rights of mortgagor

• Date of hearing
• Description of property
• Default (why in default)
• Amount of debt (including whether the debt has been accelerated)
• Debtor has right to appear and show cause why foreclosure shouldn’t be allowed
• Consequences of foreclosure:  Know that whoever purchases property has title and right of possession
• Appropriate names and addresses

If debtor has change of information, need to let mortgagee know so that if there is a change in hearing, debtor can be notified

(d) Hearing

Conducted by clerk of court

Findings by clerk

Proof of valid debt ® Instrument (e.g., promissory note)

Default (doesn’t matter if there was prior agreement ® Not for clerk to determine)

Right to foreclose ® Power of sale clause

Proper service

Time for appealing clerk’s findings:  10 days

Waiver of notice and hearing

Purpose is to make sure debtor understands rights

De novo

May waive right only in limited circumstances

Can’t waive if debt property cost More  than $100K

Notice of sale (After findings of fact)® § 45-21.16A

Contents

• Date
• Time
• Place

·         Terms and conditions of sale

Posting

·         At least 20 days prior to sale

Publication

• Publication in newspaper of general circulation in that area and qualified to run legal advertisement(2 successive weeks)
  • No more than 10 days preceding the sale
• Mail to all parties:  Notify all parties entitle to notice of hearing
  • At least 20 days before the sale

(a) Any person desiring a copy of notice of sale, after recording and prior to filing notice of hearing under .16, request a copy of notice of sale.

• THE OBJECT OF THIS SECTION IS TO PREVENT FRAUD, and to that end it requires the registration of encumbrances so that purchasers and creditors may have notice of their existence and nature, and all persons may see for what the encumbrances were created. When the registration is made, creditors of the mortgagor are able to avail themselves of their legal remedy against the equity of redemption in the land.
• The purpose of this section is to prevent fraud, and liens registered under this Article are still subject to the common law of North Carolina for determination of their validity. The statute merely adds an additional requirement that a mortgagee must meet before successfully asserting an interest in rents and profits of a mortgaged property against third parties. It is designed to protect third

• A deed of trust or mortgage of real property must be registered in the county where the land lies, or if the land is located in more than one county, then the deed of trust or mortgage must be registered in each county where any portion of the land lies in order to be effective as to the land in that county

• Power of sale terminated by submitting an upset bid prior to expiration of time, after sale or resale is held and payment is made or tendered.
  • Tenant in possession has the right to redeem property and pay off balance of debt—see PMBR

(The payment of the full mortgage indebtedness to the mortgagee within that time cancels the instrument and all rights arising thereunder. In such case no recovery of damages can be had by the bidder against the mortgagor or a purchaser from him to whom the equity of redemption has been conveyed. Cherry v. Gilliam)

• Generally, mortgagee entitled to deficiency judgment
  • Except –
    • Purchase money mortgage held by the financing seller precludes deficiency if—
      • Creditor was seller of property
      • Mortgage or DOT secured purchase price
      • This is evidence from the face of deed or mortgage.
        • Even if DOT says that mortgagor is strictly liable for costs, deficiencies, and attorney’s fees all mortgagee can get is the property and proceeds from a sale.

Order of payment

·         Costs and expenses

• Taxes
• Special assessments
• Debt itself

Surplus–Goes to junior lienholders, who are the only ones impacted by this foreclosure

• Step 1:  Pay foreclosing mortgagee/lienholder

• Step 2:  Pay juniors if there is surplus (necessary parties)
• Step 3:  Seniors keep same place because proper parties can’t be impacted by foreclosure of junior if not a party ® Buyer takes subject to senior liens

1.       No bidders

2.       Circumstances decrease # of prospective bidders

3.       There are many other sales held at that time

4.       Illness or good reason

5.       Good cause

(b) Once postponement exercising party through agent/atty

1. At the time and place advertised for the sale
2. Attach to or enter the original notice of sale and postponement
3. Provide written notice to each party entitled under 45.21.17

( c) The posted notice of postponement shall—

1.       State sale is postponed

2.       State the hour and date to which sale is postponed

3.       State reason

4.       Signed by person autho. To hold the sale

(d) If sale is not held at time fixed as provided in postponed or within 90 days

1.       A new hearing need not be held under 45-21.16

2.       Notice need to be re-dispatched under 45-21.16A

3.       Posting and publishing need to occur again under 45.21.17

4.

(c)

(b) in such a case, sale can be held in any one of the counties.

(c) Unless mortgage or DOT designates the place of the sale

(e)     Mortgage or DOT confers the place of sale which shall be premises to be sold or as:

1. Courthouse door/cty where land is located (2) or any one (if located in 2)

(b) and fix the time and place for sale

(c) before the expiration of the 10 day upset bid, the foreclosure stayed by bankruptcy is lifted, mortgagee or trustee need not apply.

Between the hours of 10:00 A.M. and 4:00 P.M. on any day other than Sunday or a legal holiday when the courthouse is closed for transactions

-When an upset bid is not filed bid within the time specified 10 day, the rights of the parties to the sale or resale become fixed

(b) Ct may require upset bidder to deposit cash bond

(e) Notice of upset bid

1.       Name, addy, tele of upset bidder

2.       amt. of upset bid

3.       Provide that the sale shall remain open for 10 days

4.       signed by bidder or atty

(e1) Notice to mortgagee/trustee of upset bid

(f)      Prior bidder released

(g)     Purchase subject to terms of original notice of sale except by ct. order

*Note that the foreclosure sale is not enough to pay debt (see

(b) all persons who filed with clerk notice of claim to the money

(c) proceeding may be transferred by civil issue, may require $200 bond

(d) Discretionary atty fees for prevailing party

* Any remaining funds goes to debtor

• Begins to run from the time of default

o    Applies to both Power of Sale and Judicial Foreclosure.

• NOT barred when it was instituted less than one year after the expiration of the 10-day period for an increase in bid.

o    Even though it was instituted more than one year after the date the property was exposed for sale.